Monday 25 April 2011 11.58 EDT
First published on Monday 25 April 2011 11.58 EDT

With her matted hair and dated makeup, Peggy is on the shelf. The shelf in question is in L'Oréal's hi-tech haircare research laboratory, hidden away in the lugubrious Paris suburb of Clichy.

Peggy, the scientists' nickname for Girls' World-style dolls' heads, has been usurped by "les robots", a glistening row of machines that can simulate everything from a shampoo and blowdry at the hairdresser's to a trip to the beach, complete with UV exposure and dunk in the sea.

Last week L'Oréal beat analysts' forecasts with a near-6% jump in like-for-like sales for the first quarter. The strong performance was driven by its consumer and luxury products divisions, which launched a welter of new products ranging from Elsève Volume shampoo to Maybelline Superstay 24 lipstick and Acqua di Gioia perfume.

L'Oréal's adverts like to draw attention to the "science part", and the Charles Zviak centre is one of four major R&D sites in France that feed the €20bn (£17bn) L'Oréal sales machine and, in turn, consumers' desire for new shampoos, lipsticks and skin lotions.

The company spends about €700m a year on research – 3.5% of sales – and the rate of innovation is such that a sixth of the 5bn products sold each year will have been launched in the previous 12 months. In total there are 18 R&D laboratories dotted worldwide but L'Oréal also relies on 13 of its Orwellian-sounding "evaluation centres" where, according to Patricia Pineau, head of communication for research and innovation, it studies the idiosyncrasies of national beauty routines. The centres include mock-ups of bathrooms from around the globe – making them sound like a multicultural B&Q bathroom showroom. "We ask women to come with their beauty case and we observe," Pineau says.

The results can be surprising. "A Korean woman uses 23 products and will spend 45 minutes getting ready," Pineau adds. The lengthy makeup session apparently involves using eyeshadow to "design a double eye to make eyes look more open".

Another study revealed that women in Mexico City like to crush their contraceptive pills into their shampoo to boost hair growth. Hair loss is a side-effect of the Mexican capital's polluted atmosphere, says Pineau, who has two PhDs under her belt and is one of L'Oréal's 3,300 scientists. "What we do then is to try to come up with a modern alternative to their traditional products and substitute it into their beauty case."

Emerging markets

The beauty hang-ups of different races spell big business for L'Oréal – not least from the growing ranks of middle-class consumers in emerging markets including India, China and South America. Sales in India are growing at more than 30% this year, buoyed by demand for men's hair dye and skin-whitening moisturisers such as Garnier Men PowerLight. Figures from Latin America are almost as impressive, with sales up 20%.

L'Oréal has been making headlines this year, but not in the beauty press, as a dispute between Liliane Bettencourt – the daughter of the company's founder, Eugène Schueller – and Bettencourt's own daughter, Françoise, spilled over into the courts.

Bettencourt, the richest woman in France, still owns 31% of L'Oréal. The saga, dubbed "Dallas sur Seine", led to claims of improper political donations and allegations of tax evasion. The controversy has fuelled speculation that Nestlé, the company's second largest shareholder, with 30%, will mount a takeover in the event of the 88-year-old Bettencourt's death, when a pact between the two parties would expire.

The uncertainty caused by the family feud, which has since been resolved, has overshadowed this year's changing of the senior management guard at L'Oréal. Its chairman, Lindsay Owen-Jones, left after 42 years at the company, while its chief executive, Jean-Paul Agon, a company lifer who is only L'Oréal's fifth commander and chief, stepped up to become executive chairman.

Owen-Jones, a Welshman known as OJ, is a hard act for Agon follow. He turned what was ostensibly a French soaps and shampoo maker into a global cosmetics group with a cupboard-full of top brands, from the eponymous L'Oréal products, which deliver 25% of sales, to Maybelline and Lancôme. To boot, he delivered almost 20 years of unbroken "double digit" increases in profits.

The Agon era got off to a bad start. In 2009, sales went backwards for the first time in the 102-year-old company's history. But the last set of results showed a rebound, with profits up by a quarter to €2.2bn on sales of €19.5bn, suggesting that the new boss had made a good start in achieving his ambition to add a billion new customers in the next 10 years.

Speaking last week, Agon said: "The first few months of the year give us confidence in our ability to outperform the market in 2011 and achieve another year of growth in both sales and profits."

Time is also on Agon's side. Geoff Skingsley, L'Oréal's human resources director and a member of the executive committee, says that Agon's tenure is expected to match that of his predecessors. "François Dalle did 25 years, Lindsay Owen-Jones did virtually a quarter of a century and Jean-Paul Agon is set squarely to do 15 to 20 years."

According to Skingsley, the company has had always had a "generational approach to senior management", selecting entrepreneurs with the vision to set its sails. "We pick people and give them long innings. This means they can look 10 years ahead."

He adds that the company's own brand has not been damaged by the Bettencourts' very public dust-up, and that L'Oréal is still rated by graduates as France's second best company to work for. "This shows that our products are respected and the company's reputation is still good."